22 December 2000

To: All Departments and Offices

In March 1996 the Minister for the Environment and Local Government agreed to a request from the Construction Industry Council (CIC) to formulate, in partnership with the CIC, a development strategy for the construction industry up to the turn of the century and beyond. To formulate the strategy the Minister established the Strategic Review Committee (SRC) whose report ‘‘Building our Future Together’’ was approved by Government and published in June 1997. The report contained 86 key recommendations with the following broad objectives:

1. - to improve efficiency and productivity in the construction industry;

In October 1997, the Minister established the Forum for the Construction Industry (FCI), with the responsibility for overseeing and advising on the detailed implementation of the SRC’s recommendations. To this end, the enclosed Memorandum sets out details of arrangements and procedures for the implementation of 26 of the SRC’s recommendations relevant to the procurement of construction contracts, as approved by the Forum. These procedures are being implemented as a package on a three year trial basis on all public funded contracts for which tenders are sought on or after 31 March 2001. In addition to the approval of the FCI the recommendations are endorsed by the Government Contracts Committee (GCC) for public funded construction contracts. Other recommendations will be the subject of future circulars as and when the Forum approves their implementation.

__________

Jim O'Farrell

Chairman

Government Contracts

Committee

- to improve efficiency and productivity in the construction industry;

(SRC Recommendations 4.4, 4.5, 4.6, 4.7 and 4.34).

Each project should have a clear and unambiguous Brief setting out the Contracting Authority’s requirements for the project. The contracting authority should nominate a suitably qualified person (either in-house, from within the wider public service, or failing this from the private sector) to assist in the development of the brief. All necessary resources should be allocated to achieve a clear brief. This appointee should not be a member of the design consultants (i.e. in the case of a building project, a design team) appointed for the project. The [Clients’ Guide to Briefing and the Building Process] published by the FCI should be used on public sector contracts - the Department of Finance’s publication ‘‘Appraisal and Management of Capital Expenditure Proposals in the Public Sector’’ July 1994 or any future version thereof is still applicable.

The briefing document should be clear on:

Background to project.

Assessment of need.

Project objectives.

Functional requirements (e.g. scope of project).

Spatial requirements (e.g. Accommodation requirements including schedule of accommodation in the case of a building project).

Design requirements (e.g. particular design constraints, standards, aesthetics, etc.).

Services requirements (e.g. in the case of a building project Mechanical Services, Electrical Services, Lift Services Information Technology etc.).

Budgetary costs (initial capital construction cost, operational costs).

Operational Policy, and

Any other requirements (e.g., design life, Health & Safety issues etc.).

The brief should be complete and should be signed off by the contracting authority before design is commenced.

The decision to develop a particular project should only be taken following a thorough appraisal of realistic options available that satisfy an identified need in the Contracting Authority’s service or operational plan. The appraisal should identify the economically most advantageous option that satisfies the Contracting Authority’s requirements. In carrying out such an appraisal it is mandatory for all Contracting Authorities to follow the Department of Finance’s publication ‘‘ Appraisal and Management of Capital Expenditure Proposals in the Public Sector’’ available from Central Section Public Expenditure Division Department of Finance’’.

Project specific partnering should be tried and evaluated on individual pilot private and public projects. Strategic partnering (over a series of projects) should be tried and evaluated by private sector clients.

(SRC Recommendations 4.10 - 4.11, 4.13, 4.14, 4.19, 4.24, 4.25, 4.29).

The quality based guidelines for consultant selection and appointment procedures used in

public sector contracts since 1987 should continue to be uniformly applied by Government Departments and by State sponsored bodies and companies subject to such guidelines where appropriate being compatible with European Union (EU) procurement rules. Any change in the procedures will be the subject of consultation with the professional institutions. The current guidelines are set out in circular 11/87: Public Construction Contracts as amended by circular letter 24/93: Professional fees for construction contracts

The FCI’s Proposed Tasks for the Execution of Design & Cost Control of Building Services Installations, sets down the required changes in practice necessary to achieve improved efficiency and the retention of high standards in design and cost management of building services. All Contracting Authorities should adopt these change as appropriate when appointing services consultants on public sector projects. The five stages which go to make up the required changes are set out in detail in the Institution of Engineers of Ireland Conditions of Engagement Agreement ME 2000 (Revised April 2000).

Public procurement procedures must comply with national and European Union (EU) procurement rules. The rules relating to national procurement procedures are set out in  Government guidelines publication ‘‘Public Procurement’’ (1994 Edition). Contracting Authorities’ should comply with these guidelines, or any subsequent circular augmenting or amending same.

National procurement guidelines apply to all contracts below the EU thresholds identified in the various Directives. It is important to note that even though a contract may be below the EU threshold the principles governing procurement under the Treaty of Rome continue to apply. These principles are non-discrimination, equality of treatment, transparency, mutual recognition, proportionality and the right of establishment and freedom to provide a service.

The current EU procurement rules are drawn from:

1. International Treaties

*The 1957 Treaty of Rome

All public procurement irrespective of contract value is bound by the principles governing procurement set down in the Treaty of Rome - these are non-discrimination, equality of treatment, transparency, mutual recognition, proportionality, right of establishment and freedom to provide a service.

*Note: The numbering of all Articles in the 1995 Rome Treaty have been renumbered as a result of the Amsterdam Treaty.

2. EU Directives

Utilities Directives 92/13/EEC (Remedies), 93/38/EEC and 98/4/EC (S.I. No 104 of 1994, S.I.

No 51 of 1995 and S.I. No 31 of 1999).

Supplies Directives 93/36/EEC and 97/52/EC (S.I. No 292 of 1994 and S.I. No 379 of 1998).

Works Directives 93/37/EEC and 97/52/EC (S.I. No 293 of 1994 and S.I. No 380 of 1998).

Services Directives 92/50/EEC and 97/52/EC (S.I. No 173 of 1993 and SI No 378 of 1998).

Remedies Directive 89/665/EEC (S.I. No 309 of 1994).

The thresholds in the Utilities, Works, Supplies and Services Directives determine when the rules in the Directives should apply.

3. European Court of Justice Decisions

Decisions, based on European case law, handed down by the European Court of Justice relating to interpretations of the Treaty and current EU procurement Directives

Amendments to these rules will be in the form of amended Procurement EU Directives, there are EU Commission proposals for major amendments of these Directives at the date of this Memorandum.

Time for tendering

Clients and their agents should allow an adequate period for the preparation of tenders. This

should not be less than 20 working days, except in the case of minor and emergency works

where a reduced time period may be used. In the case of public works contracts under EU Directives, the time periods should not be less than the minimum periods specified in these Directives (which under the current works Directives generally range from 26 calendar days upwards, in exceptional cases the minimum time period must not be less than 22 calendar days).

Nominated Mechanical and Electrical Subcontractors

Mechanical and Electrical contractors each with works valued at more than £50,000 and who are sub-contractors to a main contractor are to be nominated.

Debriefing

1. Post Tender/Pre Award Debriefing applicable to National and EU procurement rules.

Immediately (within 2 working days) after the opening of tenders, Clients should circulate to each tenderer a list in ascending order of the tender sums on the Forms of Tender, by so doing it is not to be taken that Clients are confirming, in any way, the validity of tenders or the arithmetical accuracy of the tender sums. The identity of tenderers should not be disclosed. It is a condition of tender that the tenderer accepts that his tender sum will be circulated in this manner. This condition should be specified in tender documents together with the fact that the Freedom of Information Act 1997 (FOI) is in place and is legally binding, on an individual basis, on all public Contracting Authorities listed under the Act who are fully responsible for complying with it. Tenderers should indicate, when tendering, what parts of their tenders are commercially sensitive and which they consider should be kept confidential should an FOI request be received. Tenderers should be made aware that each FOI request must be considered individually and that the decision on the release of information rests initially with the Deciding Officer in the Contracting Authority concerned and ultimately (under external review) with the Information Commissioner.

2. Post Tender Post AwardDebriefing applicable when EU Procurement Directives Apply.

Unsolicited information

A Contract Award Notice should be published in the Official Journal of the European Communities (OJEC). The contracting authority is obliged, following approval from the funding authority, to promptly inform tenderers of decisions taken on contract awards.

The maximum time limit for despatch of a contract award notice to the Office for Official Publications of the European Communities (OOPEC) is currently 48 days after award of contract.

The model contract award notice in the directives identifies the maximum amount of debriefing information that should be published.

Solicited information

Under the current Directives a contracting authority shall reply within 15 days of the date on which a written request is received:

(i) giving the reasons for the elimination of a tenderer from a competition, where applicable;

(ii) giving the reason why a tenderer was not successful- including the characteristics and relative advantages of the tender selected as well as the name of the successful tenderer.

In exceptional cases the release of information in (i) or (ii) may be withheld where the release of such information would impede law enforcement or subject to FOI be contrary to the public interest, or would prejudice legitimate commercial interests or fair competition between service providers.

Unsolicited information

Contracting authorities should, following approval from the funding authority, promptly inform tenderers of the decisions taken on contract awards. The following information should be communicated in writing to each admissible unsuccessful tenderer.

1. Name and address of contracting authority.

2. Date of award of the contract.

3. Name of successful tenderer.

4. The ranking of the unsuccessful tenderer.

Eliminated tenderer(s) should be so informed.

Note: List of tender sums should have been circulated at Post Tender/Pre Award Debriefing stage.

Solicited information

As already stated the Freedom of Information Act (FOI) is in place and is legally binding, on an individual basis, on all public Contracting Authorities listed under the Act who are fully responsible for complying with it. Tenderers should indicate, when tendering, what information relative to their tenders they consider commercially sensitive and which should be kept confidential should an FOI request be received. Tenderers should be made aware that each FOI request must be considered individually and that the decision on the release of information rests initially with the Deciding Officer in the Contracting Authority concerned and ultimately (under external review) with the Information Commissioner.

Tender Assessment

1. Building Projects

A tender assessment, in the case of an Open tender procedure, should consist of:

The competence and suitability of the tenderer, the tender total and make up and, the Priced Bill of Quantities. The award criteria can either be:

The Lowest Price only (i.e. the lowest priced from a contractor competent to execute the project): or

The Most Economically Advantageous Tender [MEAT] (i.e. where award criteria including price must be listed in descending order of importance in the contract notice or tender documents).

In the case of a Restricted Tender procedure, the assessment should consist of:

The tender total and make up and, the Priced Bill of Quantities. The award criteria can either be,

The Lowest Price only (see above).

or

The MEAT (see above).

2. Civil engineering Works

(Including Mechanical and Electrical work associated with civil engineering works)

A tender assessment, in the case of an Open tender procedure for tenders that meet the minimum objective qualitative criteria set out in tender documents, should consist of:

The MEAT where award criteria including price must be listed in descending order of importance in the contract notice or tender documents.

Tender assessment for design/build and design/build/finance projects should continue to be based on explicit MEAT criteria, ranked in order of importance and clearly set out in either the contract notice or the tender document.

Instructions to Tenderers

Instructions to tenderers on all construction contracts should be comprehensive and be issued in good time. Any amendments to these instructions post issue of tender documents, should be kept to the absolute minimum and notified in writing to prospective tenderers in good time, and in any event not later than 10 working days before the last date for receipt of tenders. If significant amendments arise, the closing date for receipt of tenders should be extended to give bidders reasonable time to assess and price the cost implications of such changes.

Objective 5

(SRC Recommendation 5.8 - 5.12, 5.20 - 5.23).

Bonds for performance of a contract (i.e. Performance Bonds) should be related to the real risk involved and should be on a sliding scale, depending on the value of the contract. Performance Bonds are normally required for all construction contracts with an estimated value in excess of £500,000 or e634,869 (this requirement may be waived in certain, very exceptional circumstances). Below this threshold, a Bond may still be required where the Contracting Authority considers that a sufficient level of financial risk exists. Such decisions should be agreed beforehand with the Funding Authority and an official record kept of the reasons thereof.

Where a Contracting Authority has one or more current contracts with the same contractor and the award of a further potential contract would bring the cumulative value above £500,000 or e634,869, an assessment of the risk exposure must be carried out by the Contracting Authority to ensure that the State’s financial interests are adequately protected. This may necessitate the provision of a Performance Bond on the proposed contract notwithstanding its value being less than £500,000 or e634,869.

Contracting Authorities should ensure that forms of Performance Bonds do not contain unduly onerous or inequitable conditions. Contracting Authorities may need to consult their legal advisors on all aspects of the Performance Bond before entering into a construction contract. To expedite matters tenderers proposing to use a non-standard bond should submit a specimen form of the bespoke bond with their tenders.

Contracting Authorities must satisfy themselves that any bond undertaken is provided by a financial institution licensed to provide such surety bonds. Where the financial institution is an insurance company it must be licensed in accordance with the Insurance Acts and Regulations (i.e. Regulations relating to insurance business made under Insurance Acts 1909 to 1990 and the European Communities (Nonlife Insurance) Framework Regulations S.I. No. 359 of 1994 made under the European Communities Act 1972 which implements Council Directives No 73/239/EEC, 88/357/EEC, 90/618/EEC and 92/49/EEC). And where it is a bank it must be licensed in accordance with the European Communities (Licensing and Supervision of Credit Institutions) Regulations S.I. No. 395 of 1992 made under the European Communities Act 1972 which implements Council Directive 89/646/EEC or hold a license issued by the Central Bank in pursuance of it’s powers under Section 9 of the Central Bank Act 1971.

A Contractor that proposes a bond issued by foreign financial institution must ensure that it contains a provision that ensures that it is subject to the exclusive jurisdiction of the Irish Courts. The sole law governing the bond will be Irish Law.

The cover level of a Performance Bond should typically be determined by reference to the following table:

Less than 2.00/2.54                                               25%

over 10/12.70                                                    12.5%

Unless a Contracting Authority has dispensed with the Performance Bond requirement, the Performance Bond must be legally secured in accordance with the following:

(a) in the case of building contracts, within 10 working days of the issue of a conditional Letter of Acceptance in accordance with clause 28(a) GDLA 82 Agreement and Conditions of Contract for Building Work, and prior to possession of the site being given. It should be made clear in the Letter of Acceptance that the offer is being accepted on condition that the tenderer can provide a satisfactory Performance Bond within a prescribed time period.

(b) in the case of engineering contracts, before a contract is signed. It should be made clear when accepting a tender, that acceptance is conditional on the production of a satisfactory Performance Bond, on written request, within the prescribed time period specified in the tender documents.

All forms of Bonds should incorporate the following:

provisions permitting variations to the scope of the contract, extensions to the period for completion of the works, indulgences, forbearance /concessions, alterations to the terms of payments, compromises/settlements of disputes without reference to the Surety, provided such matters do not materially affect the risk covered by the Bond.

the Bond maximum cover level should generally be reduced to 50% from the issue of the certificate of Practical Completion for the complete project under GDLA 82 Agreement and Conditions of Contract for Building Work or the issue of a Certificate of Completion in the case of an Engineering contract. The risk must remain on cover for a further period of 15 months from the date of issue of such certificates.

a period of notification, to the surety by the Contracting Authority or its representative of any serious breach of or default in any of the terms and conditions of the contract by the contractor, which shall not be less than 3 months.

an arbitration provision, in the event of a dispute arising between the Surety and the Contracting Authority. The Arbitrator to be appointed by agreement, or failing agreement an Arbitrator appointed, on the request of either party, by the President for the time being of the Royal Institute of the Architects of Ireland in the case of building contracts and the President for the time being of the Institution of Engineers of Ireland in the case of engineering contracts. Any reference to arbitration shall be deemed to be a submission to arbitration within the meaning of the Arbitration Act 1954 (Number 26 1954) or any statutory re-enactment or amendment thereof in force at the time.

A facility for the use of Retention Bonds instead of retention money after practical completion/completion should be included in the conditions of contract. Retention Bonds should be used on a pilot basis for a trial period of 3 years before being considered for general application.

The necessary contract amendments to the Agreements and Conditions of Contract for both building and civil engineering Works are set out in Appendix I which also includes sample Retention Bond forms.

The Prompt Payment of Accounts Act 1997 (Number 31 of 1997) was passed into law in May 1997 and became operative from 2 January 1998 by Ministerial order (S.I. No. 239 of 1997, dated 4 June 1997). It applies to all public sector purchasers set out in the Schedule to the Act, (see GCC circular dated 23 December 1997 on Prompt Payment of Accounts Act 1997).

The order setting the Rate of Interest Penalty at 0.0322% per day, equivalent to 11.75% per annum (S.I. No. 502 of 1997, dated 16 December 1997) effective from the 2 January 1998, and the order subsequently setting the rate 0.0274% per day, equivalent to 10% per annum (S.I. No. 62 of 1999, dated 4 March 1999) effective from 6 April 1999 is further revised to 0.0294 per day, equivalent to 10.74% per annum (S.I. No. 392 of 2000, dated 29 November 2000) effective from 2 January 2001.

Payments due to firms or individuals outside the main contract relationships but within the chain of payments (e.g. suppliers and manufacturers), should be made within agreed time scales - which should not exceed 45 days.

It is of the nature of construction that technical difficulties will arise on site and misunderstandings differing interpretations etc. will occasionally arise on contracts. Clients and those involved in the industry should acknowledge this fact and should enter into contractual relationships in a mutually supportive spirit in order to maximise the benefits of the goodwill which each brings to such relationships. Parties to both public and private sector contracts should endeavour to settle contractual disputes amicably by negotiation - with reasonable give and take on both sides. This provides the quickest and cheapest resolution mechanism, consistent with preserving a good business relationship.

The Construction industry should use conciliation as a favoured mechanism for dispute resolution but Clients and contractors should be able to agree on alternative dispute mechanisms - mediation and adjudication - on pilot projects if they wish.

Clients and contractors should only use arbitration as a last resort, because of the time and legal expenses involved and the danger of ensuing loss of goodwill. 

(SRC Recommendation 3.6, 3.7, 3.8 and 3.10).

HEALTH AND SAFETY.

The Construction Safety Partnership Plan 2000 to 2002 (February 2000) of this year by the Health and Safety Authority incorporates a time table for implementation of the SRC Report Recommendations relating to Health and Safety.

Contracting authorities who commission or undertake construction work must be to the forefront in ensuring compliance with the Safety Health and Welfare at Work (Construction) Regulations 1995. (S.I. 138 of 1995 transposing into national law Council Directive 92/57/EEC on the minimum safety and health requirements at temporary or mobile construction sites.). The relevant 1995 Regulations are currently under going substantial review and amendments.

Contracting authorities should refer to the ‘‘Guidelines to the Safety, Health & Welfare at Work (Construction) Regulations 1995’’, in assessing the competence of the Project Supervisor Design Stage and the Project Supervisor Construction Stage.

As a matter of best practice when undertaking or commissioning construction work, contracting authorities should refer to health and safety in the advertisement /contract notice in relation to the requirement to comply with the 1995 Regulations (as amended).

The Public Procurement (1994) booklet setting out Government procurement guidelines for State sector purchases is only amended in relation to the changes identified in this notice for construction contracts, the changes will be effective from 31 March 2001.

Clause 2(c); the first and second paragraphs remain unchanged except for being numbered (i) and (ii), after the second paragraph the following is inserted.

’’(iii) Where the Contractor has exercised his right to provide a retention bond in accordance with the provision of Clause 35(e)(ii) and if within fifteen (15) working days after issue of a written notice from the Architect requiring compliance with any Architect’s Instruction the Contractor does not comply therewith, the Employer shall have the right to claim payment against the retention bond for all costs incurred in employing or paying other persons to execute any work whatsoever which may be necessary to give effect to such instructions, provided that the requirements specified in Supplement (B) hereof have been complied with. Any shortfall that arises between the amount of the Employer’s entitlement under the retention bond and all costs incurred in connection with such work shall be deducted by the Employer from any moneys due or to become due to the Contractor under this Contract or any other Contract made between the Employer and the Contractor or may be recoverable from the Contractor by the Employer as a debt’’

Clause 35(e)(ii) and (iii) should be moved down one place to (iii) and (iv) to allow for a new 35(e)(ii) as an option which the contracting authority may exercise.

The new Clause35(e) (ii) is as follows;

’’ 1 (ii) After the Architect notifies the Employer and the Contractor that the Works are practically complete, the Contractor may at his own expense provide a retention bond in favour of the Employer issued by a financial institution approved by the Employer, which approval shall not be unreasonably withheld, in the format set out in Supplement (B) of these Conditions. The Architect, upon receipt by the Employer of such retention bond, shall issue a certificate for the release of the residue of the amounts still retained to the value of the retention bond and the Contractor shall be entitled to payment thereof within the Period for Honouring Interim Certificates’’

1 If the Employer decides that the Retention Bond option is not to be exercised, Clause 35(e) (ii) should be struck out.

Note: Supplement (A) relates to the 1992 Revision of the Price Variation Clause

effective from 31 March 2001

The Royal Institute of the Architects of Ireland with the approval of the Department of Finance after consultation with the Construction Industry Federation, and the Society of Chartered Surveyors in the Republic of Ireland acting pursuant to Sub-Clause 35(e)(ii) of the Conditions of Contract publishes hereunder the Retention Bond form to be used when operating Sub-Clause 35(e)(ii).

We,.........................................................................understand that under the terms of your Contract No ................................................(‘the Contract’) with.................................................... (hereinafter called the Applicant), of..........................................for the.......................... you.................................... at................................................. are retaining the sum of £/e ....................................being.................of the Contract value by way of retention monies (‘the Retention Monies’) and that you are prepared to release the said Retention Monies (less retention monies held on nominated subcontractors not bound by a Retention Bond agreement) against a guarantee.

In consideration of your releasing the sum of £/e .................................. to the Applicant we,........................................... hereby guarantee the repayment to you on demand of up to£/e....................................... (say...............................................................) in the event of the Applicant failing to fulfil his obligations under the said Contract, provided that your claim hereunder is received in writing at this office accompanied by your signed statement that:-

1) the Applicant has failed to fulfil his obligations under the terms of the Contract,

and

2) the Applicant has been advised in a written notice issued by the Architect, simultaneously copied to this office, in accordance with Clause 2(c) (iii) of the Conditions of Contract, of your intention to claim payment under this guarantee in the event of any of the obligations notified remaining unfulfilled fifteen (15) working after the date of issue of the notice.

This guarantee shall remain valid until close of business at this office on the date of issue of the Final

Certificate or until the expiry of 15 months after practical completion whichever is the earlier (‘Expiry’), subject to any matter of claim in dispute with the Applicant notified to this office before Expiry. Any claim hereunder must be received in writing at this office before Expiry (subject to the notification referred to above) accompanied by your signed statement as aforesaid, and such claim and statement shall be accepted as conclusive evidence that the amount claimed is due to you under this guarantee.

Claims and statements as aforesaid must bear the dated confirmation of your bankers in the case of Government Departments and Offices confirmation of an official not below the rank of principal officer that the signatories thereon are authorised so to sign.

This guarantee shall become operative upon receipt of the Retention Monies (less retention monies held on nominated subcontractors not bound by the retention bond agreement) by the Applicant.

Upon Expiry, this guarantee shall become null and void, whether returned to us for cancellation or not and any claim or statement received after Expiry (subject to the notification referred to above) shall be ineffective.

This guarantee is personal to yourselves and is not transferable or assignable, except by agreement which agreement shall not be unreasonably withheld.

This guarantee shall be governed by and construed in accordance with the Laws of Ireland and shall be subject to the exclusive jurisdiction of the Irish Courts.

If either party to this bond shall be aggrieved regarding matters covered by this guarantee the party so aggrieved shall forthwith by notice in writing to the other refer such dispute or difference to arbitration of a person to be agreed upon between the parties or (if the parties fail to appoint an arbitrator within one calendar month of service of the notice as aforesaid) a person to be appointed on application of either party by the President for the time being of the Royal Institute of the Architects

of Ireland and such arbitrator shall forthwith and with all due expedition enter upon the reference and make an award thereon which award shall be final and conclusive. If the arbitrator declines the appointment or after appointment is removed by order of a competent Court or is incapable of acting or dies and the parties do not within one calendar month of the vacancy arising fill the vacancy then the President for the time being of the Royal Institute of the Architects of Ireland may on application of either party appoint an arbitrator to fill the vacancy. In any case where the President for the time being of the Royal Institute of the Architects of Ireland is not able to exercise the aforesaid functions conferred upon him the said function may be exercised on his behalf by the Vice President for the time being of the Royal Institute of the Architects of Ireland.

Executed as a Deed this.........................day of................................2001

The common Seal of

was hereunder affixed by

.....................................................

Clause 60, insert new sub-clause (5)(d) as follows;

‘‘1 (d) If after the issue of the Certificate of Completion, the Contractor submits a retention bond, in the format set out in Appendix J of the Strategic Review of the Construction Industry 1997 issued by an Insurance Company or Bank, approved by the Employer which approval shall not be unreasonably withheld, then the other half of the retention money shall be certified to the Contractor within 14 days of the date of approval of the retention bond’’

1 If the Employer decides that the Retention Bond option is not to be exercised, Clause 60(5)(d) should be struck out.

Clause 39, insert new sub-clause 4(f) as follows:

‘‘1 (f) If after the issue of the Taking-Over Certificate, the Contractor submits a retention bond, in the format set out in Appendix J of the Strategic Review of the Construction Industry 1997 issued by an Insurance Company or Bank, approved by the Purchaser which approval shall not be unreasonably withheld, then the balance of 2.5% of the Contract Price shall be certified to the Contractor within 14 days of the date of approval of the retention bond’’

1 If the Employer decides that the Retention Bond option is not to be exercised, Clause 39.4(f) should be struck out.

We,.........................................................................understand that under the terms of your Contract No ................................................ (‘the Contract’) with....................................................(hereinafter called the Applicant), of.............................................for the..................................... you.................................... at...............................................................are retaining the sum of £/e ................................ ..............being.................of the Contract value by way of retention monies (‘the Retention Monies’) and that you are prepared to release the said Retention Monies against a guarantee.

In consideration of your releasing the sum of £/e ........................................................ to the Applicant we,......................................................... hereby guarantee the repayment to you on demand of up to£/e....................................... (say...............................................................) in the event of the Applicant failing to fulfil the said Contract, provided that your claim hereunder is received in writing at this office accompanied by your signed statement that:-

1) the Applicant has failed to fulfil his obligations under the terms of the Contract,

and

2) the Applicant has been advised in writing at least 30 (thirty) days before the date of your claim of the obligations of the Contract which have not been fulfilled and of your intention to claim payment under this guarantee.

This guarantee shall remain valid until close of business at this office on issue of the ........................... Certificate or until............................ whichever is the earlier (‘Expiry’), subject to any matter of claim in dispute with the Applicant notified to this office before Expiry. Any claim hereunder must be received in writing at this office before Expiry accompanied by your signed statement as aforesaid, and such claim and statement shall be accepted as conclusive evidence that the amount claimed is due to you under this guarantee.

Claims and statements as aforesaid must bear the dated confirmation of your Bankers that the signatories thereon are authorised so to sign.

This guarantee shall become operative upon receipt of the Retention Monies.

Upon Expiry, this guarantee shall become null and void, whether returned to us for cancellation or not and any claim or statement received after Expiry shall be ineffective.

This guarantee is personal to yourselves and is not transferable or assignable, except by agreement which agreement shall not be unreasonably withheld.

This guarantee shall be governed by and construed in accordance with the Laws of Ireland and shall be subject to the exclusive jurisdiction of the Irish Courts.

If either party to this bond shall be aggrieved regarding matters covered by this guarantee the party so aggrieved shall forthwith by notice in writing to the other refer such dispute or difference to arbitration of a person to be agreed upon between the parties or (if the parties fail to appoint an arbitrator within one calendar month of service of the notice as aforesaid) a person to be appointed on application of either party by the President for the time being of the Institution of Engineers of Ireland and such arbitrator shall forthwith and with all due expedition enter upon the reference and make an award thereon which award shall be final and conclusive. If the arbitrator declines the appointment or after appointment is removed by order of a competent Court or is incapable of acting or dies and the parties do not within one calendar month of the vacancy arising fill the vacancy then the President for the time being of the Institution of Engineers of Ireland may on application of either party appoint an arbitrator to fill the vacancy. In any case where the President for the time being of the Institution of Engineers of Ireland is not able to exercise the aforesaid functions conferred upon him the said function may be exercised on his behalf by the Vice President for the time being of the Institution of Engineers of Ireland.

Executed as a Deed this.........................day of................................2001

The common Seal of

was hereunder affixed by

.....................................................

Clause 37 is to have two sub-clauses - sub-clause (a) dealing with the new conciliation process and sub-clause (b) dealing with the existing arbitration provision. The two sub-clauses are as follows:

Disputes Resolution    37(a) Provided always that in case any dispute or difference shall arise between the Employer or the Architect and the Contractor, as to the construction of the Contract or as to any matter or thing arising thereunder (other than any dispute or difference arising under Clause 39) or as to the withholding of any certificate to which the Contractor may claim to be entitled, then either party shall forthwith give to the other written notice of such dispute or difference, and prior to any reference to arbitration under sub-clause (b) of this Clause such dispute or difference shall be referred to conciliation in accordance with the Conciliation Procedures set out in Supplement (C) to these conditions.

37(b) If a settlement of any dispute or difference is not reached under the conciliation procedures under sub-clause (a) of this Clause then either party may forthwith give to the other written notice that such dispute or difference has not been resolved and such dispute or difference shall be and is hereby referred to the arbitration and final decision of such person as the parties hereunto may agree to appoint as Arbitrator or, failing agreement, as may be appointed on the request of either party by the President for the time being of the Royal Institute of the Architects of Ireland, and the award of such Arbitration shall be final and binding on the parties. Such reference, except on the question of certificates, shall not be opened until after the Practical Completion or alleged Practical Completion of the Works or the determination or alleged determination of the Contractor's employment under this Contract, unless the Employer and the Contractor consent thereto in writing.

The Arbitrator shall have power to open up, review and revise any opinion, decision, requisition or notice, and to determine all matters in dispute which shall be submitted to him, and of which notice shall have been given as aforesaid, in the same manner as if no such opinion, decision, requisition or notice had been given. Every or any such reference shall be deemed to be a submission to arbitration within the meaning of the Arbitration Act, 1954 (Number 26 of 1954), or any Act amending the same.

effective from 31 March 2001

The Royal Institute of the Architects of Ireland with the approval of the Department of Finance after consultation with the Construction Industry Federation, and the Society of Chartered Surveyors in the Republic of Ireland acting pursuant to Sub-Clause 37(a) of the Conditions of Contract publishes hereunder the Conciliation Procedures which are to be followed when operating Sub-Clause 37(a).

1. This procedure shall apply to any conciliation requested under Clause 37 (a) of the GDLA ('82) Form of Contract.

2. A party to the contract seeking conciliation shall notify the other party in writing to that effect and shall at the same time specify the matter in dispute.

3. The parties shall agree on a conciliator, and failing agreement within 10 working days of notice served under 2 above, shall request the President of the RIAI to appoint a conciliator from a list of conciliators agreed between the RIAI, the SCS and the CIF.

4. The conciliator shall require the parties to submit, in advance of the hearing, a brief written opening statement and appending the necessary documentation not later than 10 working days after his appointment. The parties should at the same time notify the conciliator of the names of the persons appearing at the conciliation.

5. The conciliator shall within 10 working days after receipt of the statements and documentation establish the order of the proceedings and shall arrange a convenient time, date and place for the hearing.

6. The conciliator may consider and discuss such solutions to the dispute as he thinks appropriate or as may be suggested by either party. All information given to the conciliator is confidential and shall remain so unless authorised by the party who supplied the information.

7. The conciliator may, having informed the parties, consult independent third party experts.

8. The conciliator shall endeavour to commit the parties to reach a mutual settlement failing which he shall within 10 working days of the hearing, issue his recommendation. He shall not be required to give reasons. It shall remain confidential if rejected by either party.

9. If neither party rejects the recommendation within 10 working days after its issue, it shall be final and binding on the parties. If either party rejects the recommendation, a request for arbitration may be made under Clause 37(b) of the GDLA ('82) Form of Contract.

10. Each party to the conciliation shall pay their own costs. The parties shall be jointly and severally liable for the conciliator's costs in equal shares, unless the conciliator decides otherwise.

11. Conciliation's are settlement negotiations and are without prejudice to the rights of the disputants. All statements, information and material, made, given or exchanged, orally or in writing, either during the conciliation or prior thereto or thereafter, upon the request of the conciliator shall be inadmissible in any legal proceedings, in court or arbitration, to the maximum extent permitted by law. Evidence which is otherwise admissible in legal proceedings shall not be rendered inadmissible as a result of its use in the conciliation. The disputants agree not to summon or otherwise require the conciliator to appear or testify or produce records, notes or any other information or material in any legal proceedings, in court or arbitration, and no recording or stenographic records will be made of the conciliation.

12. Any agreement reached by the disputants through the conciliation shall be set down in writing and duly executed by their authorised representative.

Existing Clause 66 should be replaced with a new Clause 66 and the Definitions and Interpretation in Clause 1(1) extended to include the definition of ‘‘Conciliation Procedure’’as follows:

DEFINITIONS AND INTERPRETATION

Definitions 1 (1) In the Contract (as hereinafter defined) the following words and expressions shall have the meaning hereby assigned to them except where the context otherwise requires:-

(r) ‘‘Conciliation Procedure’’ means the Conciliation Procedure 2000

of the Institution of Engineers of Ireland or any Department of Finance approved amendment or modification thereof being in force at the time of the appointment of a conciliator.

RESOLUTION OF DISPUTES

Resolution of dispute 66 (1) Except as otherwise provided in these Conditions if a dispute of any  kind whatsoever arises between the Employer and the Contractor in connection with or arising out of the Contract or the carrying out of the Works including any dispute as to any decision opinion instruction direction certificate or valuation of the Engineer ( whether during the process of the Works or after their completion and whether before or after the determination abandonment or breach of the contract ) it shall be determined in accordance with the following provisions.

Notice of Dispute (2) For the purpose of sub-clauses (2) to (7) inclusive of this Clause a dispute  shall be deemed to arise when one party serves on the Engineer a notice in writing ( hereinafter called ‘‘the Notice of Disputes’’) stating the nature of the dispute. Provided that no Notice of Dispute may be served unless the party wishing to do so has first taken any steps or invoked any procedure available elsewhere in the Contract in connection with the subject matter of such dispute and the other party or the Engineer ( as the case may be ) has

(a) taken such steps as may be required pursuant to the provisions of the

Contract or

(b) been allowed a reasonable time to take any such steps.

Engineer’s decision (3) Every dispute notified under sub-clause (2) of this Clause shall be settled by the Engineer who shall state his decision in writing and give notice of the same to the Employer and the Contractor within the time limits set out in sub-clause (5) of this Clause.

Effect on Contractor and Employer (4) Unless the Contractor has already been determined or abandoned the Contractor  shall in every case proceed with the Works with all due diligence and  the Contractor and the Employer shall both give effect forthwith to every such decision of the Engineer. Such decisions shall be final and binding upon the Contractor and the Employer unless and until the same shall be revised by

(a) an agreement to settle entered into by the parties pursuant to the provisions of the Conciliation Procedure or otherwise or

(b) an arbitration in an award made and published.

Notice to Refer (5) (a) Where a Certificate of Substantial Completion of the whole of the Works has not been issued and either

(i) the Employer fails to give such decision for a period of one calendar month after the service of the Notice of Dispute

(ii) the Engineer fails to give such decision for a period of one calendar month after the service of the Notice of Dispute

then either the Employer or the Contractor may within three calendar months after receiving notice of such decision or within three calendar months after the expiry of the said period of one month ( as the case may be ) refer the dispute to the arbitration of a person to be agreed upon by the parties by serving on the other party a written notice ( herein referred to ‘‘the Notice to Refer’’ ).

(b) Where a Certificate of Substantial Completion of the whole of the Works has been issued the foregoing provisions shall apply save that the said period of one calendar month referred to in sub-clause (a)(ii) above shall be read as three calendar months.

(c) Provided always that such reference to arbitration shall only be permitted within the time limits stipulated in this sub-clause.

Conciliation (6) Where a Notice to Refer a dispute to arbitration has been given in accordance with sub-clause (5) of this clause no further step in the reference shall be taken by either party unless an attempt has first been made by the parties to resolve the dispute by conciliation under the Conciliation Procedure. It shall be mandatory on both parties immediately to engage in the Conciliation Procedures once one party has notified the other of its wish to invoke the said Procedure. The reference may proceed if a resolution pursuant to the provisions of the Conciliation Procedure is not reached within forty two days or such extended period as may be agreed by the parties from the date of the Notice to Refer.

Arbitration (7) (a) Any dispute in respect of which

(i) the decision if any of the Engineer has not become final and binding pursuant to sub-clause (4) and (5) of this Clause and

(ii) a resolution pursuant to the provisions of the Conciliation Procedure has not been reached within the period or amended period stated in sub-clause (6) of this Clause shall be finally resolved by arbitration.

Any reference to arbitration shall be conducted in accordance with the Arbitration Procedure. The arbitrator shall have full power to open up review and revise any decision opinion instruction direction certificate or valuation of the Engineer and neither party shall be limited in the proceedings before such arbitration to the evidence or arguments put before the Engineer for the purpose of obtaining his decision above referred to.

(b) Any such reference to arbitration shall be deemed to be a submission to arbitration within the meaning of the Arbitration Acts 1954 and 1980 or any statutory re-enactment or amendment thereof for the time being in force.

President or Vice-President to act (8) (a) If the parties fail to appoint an arbitrator within one calendar month of  either party serving on the other party a written notice to concur in the  appointment of an arbitrator the dispute shall be referred to a person to be appointed on the application of either party by the President for the time being of the Institution of Engineers of Ireland.

(b) If an arbitrator declines the appointment on or after appointment is removed by order of a competent court or is incapable of acting or dies and the parties do not within one calendar month of the vacancy arising fill the vacancy then either party may apply to the President for the time being of the Institution of Engineers of Ireland to appoint another arbitrator to fill the vacancy.

(c) In any case where the President for the time being of the Institution of Engineers of Ireland is not able to exercise the functions conferred on him by this Clause the said functions may be exercised on his behalf by a Vice- President for the time being of the said Institution.

Engineer as witness (9) No decision given by the Engineer in accordance with the foregoing  provisions shall disqualify him from being called as witness and giving evidence before the arbitrator on any matter whatsoever relevant to the dispute so referred to the arbitrator.

Appendix III - Currently only available in hard copy